How Russian money flowed through banks in Europe

May 21, 2014|Stephen Grey, Jason Bush and Roman Anin | Reuters

MOSCOW (Reuters) - Two Putin associates, Nikolai Shamalov and Dmitry Gorelov, struck lucrative deals to supply medical scanners and other gear for Russia's state health program. Some of the proceeds from those deals, Reuters found, ultimately wound up helping to finance the luxurious mansion on the Black Sea popularly known as "Putin's palace."

The money trail is a convoluted one.

A UK-registered company owned by the two men, Greathill, received at least $195 million from sales of medical equipment to Russia.

In total, Greathill sent some $84 million to accounts at the former Dresdner Bank in Zurich. According to bank statements reviewed by Reuters, more than $56 million went from Greathill to the Swiss accounts after 2006, when Putin's national health project began.

Those Swiss accounts were controlled by a Belize-registered company called Lanaval - a firm that was also owned by Shamalov and Gorelov, according to Sergei Kolesnikov, a former business associate of the two men.

The claim that Shamalov and Gorelov own Lanaval is supported, in part, by documents reviewed by Reuters. The documents set out an arrangement under which Greathill agreed to act as an agent for Lanaval, remitting profits to Lanaval from business conducted by Greathill. Shamalov did not respond to written questions.

No one from Lanaval could be reached for comment. A spokesman for LGT Group, the successor bank to Dresdner, said that under Swiss and Liechtenstein laws the bank was unable to respond to Reuters' questions.

Reuters reviewed more than 140 pages of Lanaval bank statements, covering 2003 to 2010. The statements indicate that between June and October 2009, Lanaval sent at least $48 million from its Zurich accounts to an account in Liechtenstein. The Liechtenstein account was controlled by a firm called Medea Investment, which is registered in Washington, DC, according to contract documents and corporate records.

Medea supplied Italian building materials to the property known as "Putin's palace," according to an agreement dated June 2009 between Lanaval and Medea Investment.

Under that agreement, which was reviewed by Reuters, Lanaval agreed to buy goods from Medea worth 37.5 million euros (about $52 million at the time). The contract says the goods were for a "big building project (resort)" in the region of Novorossiysk, on the Black Sea. Novorossiysk is a town near the palace, about 40 km (25 miles) away. The "big building project" and the "Putin palace" estate are one and the same, said Kolesnikov.

The owner of Medea Investment is Lanfranco Cirillo, an Italian architect, Kolesnikov said. It was Cirillo, who has often worked in Russia, who designed the "Putin palace" property, Kolesnikov said.

Reuters asked Cirillo, through Medea's lawyer in Switzerland, about the contract, his ownership of Medea and his role as architect in the Black Sea development. Cirillo replied with a brief statement in which he confirmed his role as architect in the project. He said a Russian company had "assigned me the work" because of his skills. "I am specialized and focused in the creation of high standing objects in many countries of the world," he said. He declined to go into detail.

The Russian company Cirillo identified as his client is named Stroygazconsulting. Corporate records indicate no tie to Shamalov and Gorelov. Asked whether it had hired Cirillo to work on the Black Sea estate known as "Putin's palace," a spokeswoman for Stroygazconsulting said: "The story in question is an invention." She added that the "only thing we can confirm" was that Stroygazconsulting and Cirillo had had a joint company "many years ago."

In any case, the contract documents reviewed by Reuters show that Cirillo's firm Medea was paid by Lanaval, the company owned by Shamalov and Gorelov.

Kolesnikov possesses a tape recording of what he describes as a 2009 meeting in St. Petersburg. There, he says, Shamalov, Gorelov and Cirillo - as well as Kolesnikov himself - discussed details of the Black Sea property and Medea's involvement.

On the tape, which was reviewed by Reuters, a man addressed by the others as "Lanfranco" talks in Russian about importing materials for the luxury estate via Medea Investment.

The man says: "If I need to import through Medea Investment, then I need to open an official representative office for Medea Investment in Russia to receive permission for customs clearance, to receive money here for investment programs and to pay rubles and to pay here."

When Kolesnikov talks of paying for the goods, "Lanfranco" asks whether paying "with black money to an American company" would be problematical. It is not clear what was meant by the reference to "black" money.

Cirillo, who speaks Russian, declined to answer questions about Kolesnikov's tape and did not say who the Black Sea property belonged to. He said in his written statement: "Every meeting held with my counterparty and any act connected thereto, that you may be aware of, was exclusively directed to define the construction work, its status and development, as well as payments to me for the services rendered."

The tape also includes a man identified as Shamalov by Kolesnikov - and referred to by others as "Nikolai Terentievich," Shamalov's first and patronymic names. On the tape, this man refers to Lanaval as "our company."

Shamalov did not respond to questions about the tape. Reuters was unable to confirm the identities of people speaking on the tape, and there is no reference on the tape to who owns the property being discussed.